Weather index insurance protects farmers against losses from extreme weather and facilitates investment in their farms, but randomized evaluations in South Asia and sub-Saharan Africa have shown low demand for these products at market prices, suggesting the need for alternative approaches.
Without substantial subsidies, take-up of insurance was low. Large discounts increased take-up substantially, and interventions designed to increase financial literacy or reduce basis risk also had positive effects. However, at market prices, take-up was in the range of 6–18 percent, which cannot sustain unsubsidized markets.
Insured farmers were more likely to plant riskier but higher-yielding crops. In the three studies that measured changes in farmer behavior, farmers who felt protected against weather risks shifted production toward crops that were more sensitive to weather but more profitable on average.
While self-sustaining markets for weather index insurance have not emerged, finding ways to address weather risk remains a priority for agricultural development. Some possibilities are improving index quality, providing subsidized insurance, selling insurance to institutions, and exploring other risk-mitigating technologies, such as irrigation and stress-tolerant crops.
A multifaceted livelihood program that provided ultra-poor households with a productive asset, training, regular coaching, access to savings, and consumption support led to large and lasting impacts on their standard of living across a diverse set of contexts and implementing partners.
We present results from six randomized control trials of an integrated approach to improve livelihoods among the very poor. The approach combines the transfer of a productive asset with consumption support, training, and coaching plus savings encouragement and health education and/or services. Results from the implementation of the same basic program, adapted to a wide variety of geographic and institutional contexts and with multiple implementing partners, show statistically significant cost-effective impacts on consumption (fueled mostly by increases in self-employment income) and psychosocial status of the targeted households. The impact on the poor households lasted at least a year after all implementation ended. It is possible to make sustainable improvements in the economic status of the poor with a relatively short-term intervention.
We evaluate, using a randomized trial, two school-based financial literacy education programs in government-run primary and junior high schools in Ghana. One program integrated financial and social education, whereas the second program only offered financial education. Both programs included a voluntary after-school savings club that provided students with a locked money box. After nine months, both programs had significant impacts on savings behavior relative to the control group, mostly because children moved savings from home to school. We observed few other impacts. We do find that financial education, when not accompanied by social education, led children to work more compared to the control group, whereas no such effect is found for the integrated curriculum; however, the difference between the two treatment effects on child labor is not statistically significant.
We conduct a randomized evaluation in urban Ghana in which micro and small tailoring enterprises receive advice from an international consulting firm, cash, both, or neither. We find that all three treatments lead to their immediate intended effects: changed business practices and higher investment. However, both treatments lead to lower profits on average in the short term. Then, in the long run, the micro-entrepreneurs in the treatment group disinvest relative to those in the control group, and revert back to their prior scale of operations and business practices.
Programs promoting financial literacy and savings among children and youth have the potential to effectively promote financial inclusion over participants’ lifetimes. Since 2009, Innovations for Poverty Action (IPA) has conducted randomized evaluations of three programs that aim to promote savings and financial education among children and youth and has found promising impacts in all three.